“With housing permits for homes at record heights, pressure on construction costs is likely to increase as the demand for residential building materials and resources continues to grow,” said Tim Lawless, director of research at Corelogic.
“The rise in residential construction costs is likely to lead to higher prices for built-in products and will also increase inflationary pressures when housing costs are most heavily weighted in the Cordell basketball price index.”
The industry is also bolstered by renovations, whose permits rose 8.1 percent in December and 37.1 percent year-over-year.
Employment in the entire construction industry, which accounts for around 9.2 percent of the total workforce, also increased by 2 percent compared to the previous quarter.
Queensland had the highest monthly and annual growth of any state through 2020, and ended the year up 1.8 percent from the previous quarter from 0.6 percent in the previous quarter.
Victoria had the second highest growth at 1 percent, while South Australia still has the lowest index value.
The federal government introduced a HomeBuilder grant of $ 25,000 in June to help offset the downturn caused by the coronavirus pandemic and initially provided a three-month period to start construction.
This has since been extended to six months in order to receive the full grant.
“Although HomeBuilder will expire after March, it is very likely that this trend towards higher home construction costs will continue,” Lawless said.
“It will be some time for builders to work through the pipeline of house permits, which increased in the second half of last year.”